💔 When Good Intentions Go Wrong: How a Lifetime Trust Could Have Protected Norma

In a heart-breaking real-life case, an elderly woman named Norma gifted her £600,000 flat—part of a £1.4 million property she shared with her daughter Dawn—to avoid inheritance tax. What followed was a dramatic breakdown of trust, family, and legal protection.

By 2022, their relationship had deteriorated so far that Dawn, the daughter, evicted her 82-year-old mother from the property. Norma, who had once believed she could live there for life, was left without a home and burdened with £10,000 in legal costs. The court rejected her claims of coercion and implied rights to stay in the home, ruling instead that the transfer was absolute and unconditional.

Where Did It Go Wrong?

Norma transferred her property with no formal Right to Occupy, no trust agreement, and no protection in the event of relationship breakdown. The transfer was made outright—likely based on poor advice or misguided belief that it would remove the asset from her estate and avoid care fees or inheritance tax.

Unfortunately, because she continued living in the property rent-free, it was classed by HMRC as a Gift with Reservation of Benefit (GWRB)—meaning it remained in her estate for IHT purposes anyway.

This case starkly illustrates the perils of informal arrangements. But it also gives us a chance to ask: what would have protected Norma?

🛡️ The Case for a Lifetime Trust

✅ 1. Right to Occupy Trust (RtO)

Had Norma placed the property into a trust with a Right to Occupy clause, she could have:

• Legally retained the right to live in the property for life
• Prevented any sale or eviction without her consent
• Clearly separated ownership from occupation
• Potentially passed IHT tests if rent or contributions were managed properly

An RtO would have created legal certainty and offered protection even if relationships turned sour.

✅ 2. Flexible Lifetime Interest Trust (FLIT)

Alternatively, a FLIT could have granted Norma a life interest, allowing:

• Full control and benefit from the property during her lifetime
• Ring-fencing of the capital value for eventual beneficiaries (e.g., her children)
• Built-in clauses to restrict sale or reallocation without her agreement
• Protection from care cost assessments or hostile claims, depending on how it was structured

Both structures would have allowed her to mitigate tax, retain housing security, and avoid the catastrophic outcome that unfolded.

⚖️ Lessons from Norma’s Case

1. Never gift a property outright without clear legal protections.
2. Informal arrangements (even among family) carry serious risk.
3. HMRC will treat gifts with continued benefit as still part of your estate.
4. Trusts—when structured correctly—can protect both people and property.